What Performance Method Best Represents Performance? Time-Weighted Rate of Return or Internal Rate

Description

This paper identifies an interesting dichotomy about investment performance.  The best mutual funds of the last ten years outperform the S&P 500 Index by 1% per year, on a time-weighted basis.  However, the accumulated assets in those funds are almost equal to the same amount of assets that would have been accumulated by investing in the S&P 500 Index.  How can we explain this?